Chancellor rules out currency union with Scotland

Scotland's Deputy First Minister has dismissed Chancellor George Osborne's warning that it would be walking away from the pound if it votes for independence as "campaign rhetoric".

Nicola Sturgeon told the BBC: "George Osborne wants people in Scotland to vote No. So do Ed Balls and Danny Alexander. They're entitled to that view, but what they are saying needs to be seen in the context of a campaign that wants to frighten and intimidate people in Scotland."

She added: Once Scotland votes, if we do vote democratically to be independent, we will look at what is in the best interests of Scotland and the rest of the UK.

"And there are some very strong, practical, hard-headed reasons why continuing to use the same currency is in the interests of people across the rest of the UK."

The UK Treasury has published a further analysis of the SNP's proposed currency union in the event of Scotland voting for separation.

Chief Secretary to the Treasury Danny Alexander said: "As a Scot and as Liberal Democrat... on the basis of this analysis, I couldn't recommend a currency union to the people of Scotland and my party couldn't agree to such a proposition for the rest of the UK.

"The SNP now need to work out what their alternative currency proposal is and set it out openly.

"This isn't bluff, or bullying, it's a statement of fact. The SNP's claims that an independent Scotland could or should be able to share the pound are pure fiction.

"When we vote in September, no one in Scotland should vote for independence in the belief that we could keep the pound."

Chancellor George Osborne has said that there is no legal reason why the rest of the UK would need to share its currency with Scotland if it opts for independence.

In a speech, he said: "The SNP says it is as much Scotland's pound as the rest of the UK's. They are like the angry party to a messy divorce.

"But the pound isn't an asset to be divided up between two countries after a break-up as if it was a CD collection".

He added: "If Scotland walks away from the UK, it walks away from the UK pound".

Chancellor George Osborne has said he "wants Scotland to keep the pound and the economic security of that it brings".

But he added: "Nothing could be more damaging to economic security here in Scotland that dividing our United Kingdom. That's not the outcome I want."

In a keynote speech today, Chancellor George Osborne is set to deliver a warning to the voters of Scotland that they will not be able to keep the pound if they opt for independence.

He will say: "Today Scotland is one of the most economically successful parts of the UK with growth per head the same as the smaller independent European states the nationalists would like Scotland to join but with far more stability and less volatility than them, thanks to being part of the UK."

According to the BBC, treasury analysis will argue that for an independent Scotland to continue to use the pound, the Scottish and UK governments would have to agree to underwrite each other's banks.

They would also have to allow taxpayers in one country to subsidise the other, and come to agreement on tax, spending and borrowing levels.

Britain's three main political parties are set to deliver a warning to the voters of Scotland that they will not be able to keep the pound if they vote for independence.

Chancellor George Osborne is expected to rule out an independent Scotland joining a formal currency union with the UK when he publishes the latest Treasury analysis of the issue in Edinburgh.

It is expected to be followed by statements from shadow chancellor Ed Balls for Labour and Treasury Chief Secretary Danny Alexander for the Liberal Democrats making clear that their parties also would not allow Scots to retain the pound.

Scotland's Deputy First Minister Nicola Sturgeon dismissed the warnings as the "Westminster establishment" trying to lay down the law to Scotland and warned the move would backfire on the pro-Union parties.

In his speech today, Mr Osborne will emphasise that being part of the UK had given Scotland economic stability, helping it to ride out the global financial economic crash.

"The pound is one of the oldest and most successful currencies in the world. I want Scotland to keep the pound and the economic security that it brings," he will say, according to an advance extract released by the Treasury.

The treasury spokesman of the Scottish National Party accused the Chancellor of "bullying tactics" today, after reports that the main Westminster parties would refuse a currency union in the event of a vote for Scottish independence.

Speaking on the BBC's Radio 4 Today programme, Stewart Hosie said a refusal to reach a deal on using the pound sterling could result in Scotland not accepting a share of the UK's national debt. He said:

"The UK Government themselves two weeks ago when they made their announcement said that the debt was UK debt and they had to honour it.

Now we are perfectly happy to service and pay our share of that but the discussions on the liabilities, including the national debt, go hand in glove with the assets, which includes the Bank of England and a currency union. And George Osborne can't have it both ways.

"It's bullying, it's panic in the No campaign, it's utterly bizarre and it will backfire."

Scotland would not need permission to continue using the pound despite the Chancellor's view on the issue, and could continue with the currency in the same way countries like Panama and Ecuador use the US dollar, Sam Bowman from the Adam Smith Institute said today.

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